Repowering ships could revitalize Great Lakes fleet

Wednesday, February 13, 2013

A new report by the Maritime Administration says U.S.-flag ships on the Great Lakes could be revitalized by repowering them with diesel or dual-fuel engines that can also use liquefied natural gas.
The report, Status of the U.S.-Flag Great Lakes Water Transportation Industry, is principally concerned with the 55 large, dry-bulk vessels that make up the U.S.-flag “Laker” fleet as of 2012, and which mostly transport iron ore, coal, limestone, cement, salt, sand, and gravel.
The number of vessels in the Great Lakes fleet has declined from 140 since 1980, but the report said "much of that decline can be attributed to a generational shift in the fleet that occurred during the 1980s. The decline in numbers of vessels and total fleet per-trip capacity between 1980 and 1990 was heavily impacted by the closure of older generation steel mill capacity during and after the severe recession of 1981–82 and the entry into the fleet of 13 1,000-foot-long, self-unloading vessels during the 12 years that followed the completion of the Poe Lock in 1969.
"Vessels that left the fleet during the 1980s were older, smaller vessels. Between 1990 and 2012, however, the total per-trip capacity of the fleet fell by less than 6 percent overall. Importantly, the industry today appears stable, with significant activity in recent years to repower and upgrade older vessels, acquisition of vessels in 2011 and 2012," the MarAd report said.
The report noted "Currently, there are 12 Lakers that are powered with steam engines rather than diesel engines."
Those ships are exempt from new sulfur pollution regulations that apply on the Great Lakes, but the report added "some Great Lakes carriers remain interested, however, in repowering these older vessels with modern engines that can burn low-sulfur fuels and get better fuel efficiency."
Last year, the Environmental Portection Agency finalized a Great Lakes Steamship Repower Incentive Program that it says consists of "an automatic waiver that will allow the owner of a Great Lakes steamship repowered to a modern diesel engine to use higher sulfur, lower priced residual fuel in the
replacement diesel engines through December 31, 2025. Although the repowered vessel must thereafter comply with the requirement to burn low-sulfur fuel, the savings in fuel costs and improved fuel efficiency through 2025 will help to defray the cost of repowering, particularly if done sooner rather than later."
Glen Nekvasil, vice president of the Cleveland-based Lake Carriers' Association, said "we think it is an excellent study in that it shows repowering our vessels is a way to make our environmental footprint even smaller.
"Our members have been repowering vessels as market conditions permit, we have had two of the 1,000-footers repowered (with more modern diesel engines) and three of the steamships were converted to diesel" in the last five years or so, he said.
Nekvasil said powering ships with LNG is being discussed, but"port infrastructure to fuel your boat is not in existence right now."
It costs $15 million-$20 million to repower a Great Lakes vessel, Nekvasil said, adding the report show "it is not necessary for us to build new ships. Because we are fresh water, the hulls last as long as you want. Why go out and build a new ship for $80 million, when $20 million will put a new engine in it and make it 99 percent efficient as a build from scratch hull?"
The MarAd report also draws attention to low-water conditions at many Great Lakes harbors, noting "silting of harbors and channels has already led to the widespread light-loading of Lakers, creating inefficiencies because cargo that could otherwise be carried at authorized depths is left on the wharf."
The Lake Carriers’ Association has said many Great Lakes harbors require 12 to 60 inches of dredging and sees the current backlog of dredging as a regional crisis.
MarAd estimates that the loss of 24 inches from authorized depths across the system would add $0.65 to $0.95 per ton to the shipping cost of cargo delivered by larger Lakers and the impact would become more severe with additional loss of draft.
Nekvasil said two harbors on the Great Lakes were closed late last year because of shallow water - St. Joseph, Mich., which receives limestone, cement and salt; and Waukegan, Ill., which takes on gypsum and cement.
"We cannot get ships into those harbors right now," Nekvasil said. - Chris Dupin